The battle between R S Lodha and the Birla family looked set to engulf the charitable trusts and societies of the M P Birla group, the very institutions that the two sides had vowed to protect in the legal confrontation over the assets of the group.
M P Birla group chairperson Priyamvada Birla, who died on July 3, 2004, had passed on the assets of the group to co-chairman R S Lodha through a registered will.
Birla vs Lodha: War over a will
"In a parallel with the legal battle over the probate of the will of Priyamvada Birla, cases are being prepared on the operations of the trusts because the Birlas are unwilling to accept the position of Lodha as a trust co-chairman," legal sources close to the development said.
The litigation between Lodha and the Birlas over the probate relate to the 32-page schedule of the group's assets, which were mostly held through corporate entities. The case is likely to come up for hearing only on August 25.
The litigation surrounding the trusts would thus be the second front in the Lodha-Birla battle. The trusts had been running independently of the death of Priyamvada Birla because of their legal status.
"The trusts managed the high profile institutions under the group like the hospitals and schools and being public bodies, were more at risk", said the source.
The trustees were in a position to disrupt their working and demand the appointment of an administrator, he implied.
However, reconstitution of trust boards was normal. For example, a couple of trustees of an M P Birla school had resigned in September 2003. One of them was now acting as solicitor for the Birlas.
The trusts were not private property and therefore were not directly affected by the death of the Priyamvada Birla. The trusts had continued to run under respective boards of trustees, with one change- the vacancy caused by the death of chairperson would have to be filled up sooner or later.
The trusts could not be transferred or otherwise alienated. In fact, they could not be wound up or liquidated unless the proceeds from such an exercise was put back into another trust of similar nature.
In a nutshell
Cases are being prepared on the operations of the trusts because the Birlas are unwilling to accept the position of Rajendra Lodha as a trust co-chairman.
Thelitigation between Lodha and teh Birlas over the probate relate to the 32-page schedule of the group's assets, which were mostly held through corporate entities.
According to a source, the trustees were in a position to disrupt the trusts' working and demand the appointment of an administrator.